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Hunt v. United States Tobacco Co.

United States Court of Appeals for the Third Circuit

April 17, 2008, Argued; August 5, 2008, Filed

No. 07-2134

Opinion

 [*219]  OPINION OF THE COURT

AMBRO, Circuit Judge

We consider whether a private plaintiff alleging "deceptive" (rather than "fraudulent") conduct under the amended catch-all provision of the Pennsylvania Uniform Trade Practices and Consumer Protection Law must prove that he justifiably relied on the defendant's alleged deceptive conduct or statements. Concluding that under the private-plaintiff standing provision of that Law he must so prove, and finding an allegation of justifiable reliance lacking in the Complaint, we vacate the District Court's judgment denying the defendant's motion to dismiss and remand  [**2] the case for determination whether to permit leave to amend.

I. Background

Plaintiff-appellee Gregory Hunt and proposed class members in this putative class action suit allege that U.S. Smokeless Tobacco Company ("Smokeless") engaged in anticompetitive behavior that artificially inflated the price of the company's moist smokeless tobacco products, causing purchasers to pay at least $ 0.07 per can more than they would have paid in an efficient market. The alleged misconduct included theft and concealment of competitors' distribution racks and point-of-sale advertisements at various stores, as well as dissemination of disparaging and false statements about competitors' products. Hunt further alleges that Smokeless concealed its anticompetitive behavior, thereby leading "all consumers acting reasonably under the circumstances to believe that they were purchasing moist smokeless tobacco products at prices born[e] by a free and fair market." 1 

In a suit  [**3] by one of Smokeless's competitors, a jury found Smokeless liable for the underlying antitrust violations. Conwood Co., L.P. v. United States Tobacco Co., No. 5:98-CV-108-R, 2000 U.S. Dist. LEXIS 12797, 2000 WL 33176054 (W.D. Ky. Aug. 10, 2000), aff'd, 290 F.3d 768 (6th Cir. 2002). Hunt does not press, however, an antitrust claim. Instead, he  [*220]  frames Smokeless's misconduct as consumer deception in violation of Pennsylvania's Uniform Trade Practices and Consumer Protection Law ("Consumer Protection Law"), 73 Pa. Cons. Stat. §§ 201-1 to 201-9.2. Specifically, he brought his suit in the Pennsylvania Court of Common Pleas under the so-called "catch-all provision" of the Consumer Protection Law, § 201-2(4)(xxi), which, following a 1996 amendment adding the words "or deceptive," proscribes "[e]ngaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding." 2 

After removing the case to the United States District Court for the Eastern District of Pennsylvania under the Class Action Fairness Act, 28 U.S.C. § 1453 (permitting the removal of certain class actions to federal court on diversity grounds), Smokeless moved to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6) on the ground that Hunt failed to allege that he had justifiably relied on Smokeless's deceptive conduct and suffered harm as a result of that reliance. The District Court denied the motion, holding that "Plaintiff does not need to establish reliance under the catch-all provision of the [Consumer Protection Law]." Hunt v. United States Tobacco Co., No. 06-cv-1099, 2006 U.S. Dist. LEXIS 64960, 2006 WL 2619806, at *2 (E.D. Pa. Sept. 11, 2006). It reasoned that because the Consumer Protection Law should be construed liberally, and because the legislature added the words "or deceptive" to the catch-all provision in 1996, the provision should be read to relieve plaintiffs of proving all the elements of common-law fraud. Id.

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538 F.3d 217 *; 2008 U.S. App. LEXIS 16547 **

GREGORY HUNT, individually and on behalf of himself and all others similarly situated v. UNITED STATES TOBACCO COMPANY; U.S. SMOKELESS TOBACCO COMPANY, f/k/a UNITED STATES TOBACCO COMPANY; UNITED STATES TOBACCO SALES AND MARKETING COMPANY, INC.; UNITED STATES TOBACCO MANUFACTURING COMPANY, INC.; UST INC.; U.S. TOBACCO BRANDS INC.; UNITED STATES SMOKELESS TOBACCO MANUFACTURING LIMITED PARTNERSHIP, Appellants

Subsequent History: Corrected by Hunt v. United States Tobacco Co., 2008 U.S. App. LEXIS 23067 (3d Cir. Pa., Aug. 5, 2008)

Prior History:  [**1] Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Civil Action No. 06-cv-01099). District Judge: Honorable Ronald L. Buckwalter.

Hunt v. United States Tobacco Co., 2006 U.S. Dist. LEXIS 64960 (E.D. Pa., Sept. 11, 2006)

CORE TERMS

deceptive, Consumer Protection Law, justifiable reliance, Smokeless's, catch-all, Consumer, purchasing, private plaintiff, advertising, justifiably rely, private-plaintiff, unfair, proscribing, causation, practices, cases, district court, class action, misrepresentations, products, alleged violation, cause of action, suffer harm, justifiable-reliance, alleges, deceive, presume, tobacco, ticket

Civil Procedure, Pleadings, Complaints, General Overview, Preliminary Considerations, Federal & State Interrelationships, Antitrust & Trade Law, Trade Practices & Unfair Competition, State Regulation, Scope, Consumer Protection, Deceptive & Unfair Trade Practices, State Regulation, Claims, Responses, Defenses, Demurrers & Objections, Motions to Dismiss